Why are Indian Start-Ups Looking to Shift their Base Abroad?

Why are Indian Start-Ups Looking to Shift their Base Abroad?

Indian startups choose to headquarter themselves in various countries.

Many Indian startups have begun traveling abroad to try their luck in a variety of marketplaces around the world after limiting themselves to concentrate on the desires of hundreds of millions of consumers within their native market. While only a few of these businesses have achieved unicorn status before expanding internationally, others with valuations considerably below $1 billion are making an impact in countries including Australia, China, the United Kingdom, the United States, and Southeast Asia.

Meanwhile, firms with much lesser value are venturing into a range of foreign markets at an early stage of their development. Restaurant business Burger Singh, SaaS startup Synup, and programming platform HackerEarth are reaping the benefits of their forays into foreign regions, despite the fact that they have yet to reach the scale of their more attention-grabbing rivals. To understand what motivates Indian startups to look at the option of setting up abroad, one should look at what is missing locally.

  • In India, sales cycles are typically longer, and profit margins per customer are often less. Selling products and services in a market marked by weak infrastructure, intermittent power supplies, and uncertain regulatory rules, India’s entrepreneurs may discover that developing their enterprises in foreign countries is less challenging.
  • Many Indian technology entrepreneurs, particularly in the B2B area, are naturally drawn to sell their products and services in the United States because it provides them with a large market, stronger demand, higher margins, and positive consumer behavior. While engineering and product development have typically relied on India’s large supply of cost-effective, skilled labor, the US has had a head start in terms of capital and customer-facing expertise.
  • Consumers are more comfortable researching and purchasing new things on the internet as the globe moves to cloud computing. Several Indian companies will be able to launch products abroad, as well as support and serve clients from India, as a result of this. In many situations, firms use India as a test bed before expanding overseas.
  • Within the last six years, international market revenues have more than tripled to account for one-third of total sales, according to companies like HackerEarth. If they had limited themselves to their markets, this would not have been conceivable.
  • Foreign nations are preferred by startups because of their favorable regulatory and taxation policies concerning their field of activity. Incorporation in a foreign country also simplifies the process of listing on a foreign stock exchange and getting access to foreign resources and capital. 
  • In some circumstances, having the firm’s headquarters in a specific country makes day-to-day operations easier because the startup has many consumers from that country. Having a global headquarters helps Indian entrepreneurs gain consumer trust, get access to technology ecosystem partners, and pave the route for their IPO objectives, allowing them to considerably increase shareholder value.

Because India has over 5,000 companies and is known for its technology talent, several nations are making it easier for entrepreneurs to relocate by providing visas and cash. In January, Estonia created a startup visa program, which has so far received applications from 16 Indian companies. Velmenni, a company that develops high-speed LiFi technology, was one of the first companies to relocate from India to Estonia. After joining the Buildit Accelerator program in New Delhi in 2012, the company relocated to Europe in 2014. Because of his Estonian connection, Deepak Solanki, the company’s founder, and CEO says he’s been able to sign up additional clients in Germany. Without a doubt, reaching a broader, more technologically advanced market and a diverse consumer base is one of the most appealing aspects of extending a local firm to a variety of foreign countries. The Indian government has also aided the expansion of Indian companies around the world. The India Tech Bridge, for example, is an Indian government project that allows domestic entrepreneurs to seamlessly transfer to the US market. A startup’s location is determined by its availability of infrastructure, talent, and funding, as well as favorable government policies. Experts agree, however, that the place of incorporation may have a relatively little direct impact on supporting an ecosystem, and that companies will join together and assist one another regardless of where they are incorporated.

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